In view of the recent Initial Public Offerings (IPOs) I believe the below except could be of assistance to small investors and shareholders:
Price transparency is relevant to retail investors as it can help avoid market failures such as “information asymmetries”. An “information asymmetries” arises where one group of market participants has more and/ or better information than another group. The latter group may take poor trading decisions because of this information shortfall.
The Markets in Financial Instrument Directive (MiFID) has addressed the problem regarding transparency of transactions on equity markets, laying down a system for the publication of details of the transactions in shares and for the disclosure of the details of current opportunities to trade in shares. However, the Directive has left the door open for the European Union to apply this system in the future to financial instruments other than shares, such as bonds and derivatives.
In October 2006 and August 2007 technical advice was sent to the European Commission on non-equity markets transparency. One of the main points arising from this advice was that even though there was no evidence of a market failure (in the form of externalities, information asymmetry, market power and sub-optimal supply of public goods) to an extent that would have warranted regulatory intervention, small intermediaries and retail investors were considered to have limited access to trading information, whilst wholesale market participants and brokers appeared to have access to all necessary trading information. As a consequence, for non-wholesale market participants, it was considered that greater post-trade transparency could be of some benefit.
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